Tag Archives: Future of Outsourcing

Pros and Cons of Outsourcing IT and Software services

pros and consSuccess of outsourcing has always been debatable from the day of its existence.  Every business owner who is willing to outsource their software development requirements to IT solution providers in India or any other developing country will always evaluate the pros and cons of outsourcing process.  In today’s aggressive competition businesses face huge cost pressure and outsourcing their IT project management and development requirement becomes a natural option for cost effective operations.

There are several research reports in market which portray more complex picture of outsourcing wherein organizations are not very satisfied with their current contracts or
they are losing confidence in one or other projects. Few of them are considering renegotiating their existing outsourcing contracts or changing the outsourcing partners.

It is really important for business owners to understand the possible pitfalls in outsourcing and how to decide the aces and ploys of outsourcing.

Advantages of Outsourcing:

  • Most important factor which business owners enjoy is the cost efficiency in getting their strategy executed. Lower labour and operation cost makes IT leaders a natural supporter of outsourcing.

  • Business owners can focus on core activities of their business such as making new strategiesCore Competencies to gain new market, sales and marketing activities etc. instead of worrying about their non-core activities.
     
  • Huge reduction in maintaining infrastructure cost and headcount which incurs while maintaining non-core activities.

  • Outsourcing can help you in streamlining the finances and cash-flow in a focused and with well-defined strategy.

  • Turnaround rate of deliverable is topped up with offshore workforce teams and you can align your resources for working on more projects.

  • Outsourcing IT services enables business owners to save money on investments on technology and developers and allows them to spend that amount in hiring resources related to their core functions.

  • Round the clock support and access to workforce for 24/7. It provides flexibility to realign the resources according to needs and help business owners to focus on gaining new clients.

Disadvantages of Outsourcing:

  • The biggest risk in outsourcing is the security of data and information. Lack of proper NDA and other agreements have resulted in leak of information’s and sensitive data.

  • Quality is a major concern and business owner’s end up spending a lot on deliverables which are not up-to the mark. This generally happens when the outsourcing vendor is not experienced or there are no quality processes.

  • At times business owners end up losing control on the operations and deliverables of the outsourced tasks.

  • Lack of defined SLA’s is also one of the main disadvantages of outsourcing. It is always recommended to have detailed SLA’s and cover each and every aspect of business unit to avoid any disappointments at later stages which either can be related to hidden costs or missing features from the deliverable.

  • Putting all the eggs in one basket does increase the risk of outsourcing failures. If you are associated with only one software vendor and that vendor goes bankrupt or due to some policy changes they ask to redefine the agreement, you might not enjoy it.

  • Communication and management of tasks in different time zones is another possible issue which business owners faces when they outsource their software and IT project management services.

  • Trust factor plays important role. It gets worst when business owners noticed lack of transparency from team working on outsourced tasks. It could be due to number of projects offshore team is handling or real experience of resources who are assigned to the projects.

These are only few of the pros and cons of outsourcing software services. Multiple issues may crop up without the clear understanding on projects, objectives etc. Maintaining transparency through project status, regular calls between client and offshore teams are the few main factors which define the outsourcing relationship.

Business owners can easily avoid all these pitfalls by choosing the right offshore partner. It is really important to organizations to review and short-list the solution providers, follow the essential steps for stress-free and successful outsourcing very carefully and align their goals and objectives before giving the contracts.

Future of Outsourcing – Will it be Globalization or Globality?

The need of Outsourcing outsourcingemerged due to a process of international integration of world’s culture, ideas, products, views and thoughts etc. Outsourcing has been an important part for business and has helped developed and underdeveloped economies to grow in a structure way. Outsourcing has allowed organizations to focus more on critical activities and making substantial competitive advantage by eliminating high maintenance processes and giving better meaning to Globalization.

From 19th century onwards Globalization has been a huge activity which has given a new meaning to internal business community and played a key role in outsourcing. Globalization is an activity which is performed by set of multinational companies from developed countries such as United States, United Kingdom, other countries in Europe and Japan for underdeveloped or developing countries such as India, China etc. The commercial flow in this era is purely centric for developed countries only.

globalizationGlobalization is mainly fuelled by quest and strong desire to enter/expand into a new and promising market of developing and under developed countries by offering low-cost products, services and jobs. From past many years, this phenomenon has started losing its charm especially when new companies entered in to the market, competition got aggressive and price war started which resulted in degraded quality of products and services.

From late 90’s market has started changing tremendously. To address the demands, expand and grow aggressively companies wanted a new environment which is far aggressive then their current environment of Globalization and give them more options in flow of commerce. They needed something which can help them to muddle through the changing world and help them to grab more opportunities in rapidly developing economies. This fear of losing markets and profits has fuelled the rise of Globality.

By many acclaimed authors and renowned economists Globality is what comes after GlobalizationGlobality and it’s a new state of worldwide hyper-competition. It is not just an activity – it’s an environment with a quest to serve globalized market aggressively. The main focus of Globality is to enable companies to compete for almost everything may it be competition for customers, partners, development capabilities or resource talent etc. and set-up a new global, free and decentralized business environment by establishing new business and governance practices.

In order to survive, compete today’s rapidly growing economies leaders from all the countries are bound to learn from each other no matter whether they are from developed or developing countries. It is a well-known fact that this environment presents both threats and opportunities by offering new challenges which can be met and manipulated for advantages and then facing barriers to grab them.

If we see today’s outsourcing trend, low-cost solution providers are growing all over the world and that too on very rapid rate which are threatening the growth and stability of markets giving more reasons to organisations due to which they are losing their confidence in outsourcing. They are challenging the leaders from established countries to go beyond the comfort zone and creating a panicky situation. Companies which are new to outsourcing generally get trapped by these challengers and end up spending fortune without getting desired deliverables.

Globality era has enabled companies to safeguard themselves in getting into such traps since Globality address the main challenge of outsourcing by striking a balance between cost and service. Outsourcing has been more structured now and lot of efforts are now going into eliminating the risk, maintaining the service level agreements, providing options to work with multiple vendors to remove dependency on one solution provider. Outsourcing is a tempted market and companies with cash generally tend to get attracted more into it however now companies are cautious and spending time in verifying the vendor capabilities before getting into an engagement with them. It has been noticed by several industry experts that outsourcing market has now gained a new height and nurturing well within Globality environment and to an extent its an end of Globalization.